The Money Chase

Financial-aid applicants can benefit from early filing

SAN FRANCISCO (CBS.MW) - Parents and students worried about looming college tuition costs and the amount of financial aid they'll receive can get a jump on the process starting next month.

The form required federal aid and for most state aid programs - the Free Application for Federal Student Aid (FAFSA) -- can be submitted beginning Jan. 1. And the sooner you file, the sooner you can estimate how much you'll have to pay.

Filing early also puts applicants well ahead of state and school deadlines, some of which are as early as Feb. 15. Missing out on those programs can means thousands of dollars in lost aid.

"The best packages usually go out to the students who apply early because we have no idea who's going to be applying later on down the line," said Harry Amaral, director of enrollment services at the University of Rhode Island.

"We try to assume that those people that are applying early are ones that want to come to our school, so we try to support them as best we can. And then we run out of money. It's the great American principle of first-come, first served," Amaral said.

The U.S Education Department estimates that $69 billion in federal aid will be doled out in fiscal year 2002, not including state and school programs. One California grant program offers up to $3,600 to students in need; another, in Missouri, provides up to $4,900.

Filing early also means any potential error or omissions on your form are caught, and fixed, soon enough to still qualify for school and student aid. Also, some applications are chosen for verification, and early filers benefit there as well.

"There may be additional information requested by the school, so that's another advantage for filing early. It can be clarified in a timely manner," Amaral said.

Great expectations

Three days after filing a FAFSA online, or two weeks after mailing the application, students receive the Student Aid Report, and it provides the "expected family contribution" or EFC. That's the minimum amount you'll be expected to pay on your own.

Schools usually don't send out financial-aid award notices until March, but parents can do a little work on their own to get an estimate of what might be coming.

Most schools deduct a student's EFC amount from the cost of attendance (tuition, books, etc.), and the difference is what the school considers the student's need. Schools then try to match their financial-aid award to that need.

A school's cost of attendance can usually be found on its Web site. Sallie Mae also offers a site, wiredscholar.com, which lists many schools' costs.

Be warned: Schools don't always have enough to cover your need, and that means you might be liable for some of the difference, on top of your expected contribution.

"It's not a never-ending supply of aid," said David Cooper, managing director of e-commerce at student-loan provider Sallie Mae, Inc. "Obviously, schools have budgets ... They allocate certain amounts of aid and usually that's distributed to those who apply first."

Get out the paperwork

Filling out the FAFSA is akin to filing taxes in terms of the paperwork you'll need to gather before you start. Income and asset information for the student and parent (if student is a dependent) will be needed, as well as any untaxed income records (such as veteran's or social security benefits), bank statements, and social-security and driver's license number.

"Oftentimes, families are caught in the situation of 'Oh my God, I didn't know I was going to need all this,'" Cooper said.

It's not necessary to have filed your taxes before filing. If you're income is steady throughout the year, your year-end paycheck will suffice to estimate your annual income for the FAFSA.

"We've always recommended to families to make the best estimates they can," Amaral said. If you wait until your taxes are filed, your application may be "absolutely correct," but "you may have passed a point in time where money has already been distributed to earlier applicants."

Some experts warn that those with variable income might want to wait at least until they have W-2s in hand. If the income estimated for the FAFSA is significantly lower than actual income, your award amounts will likely be reduced later.

Once you have your paperwork organized, you'll need to get a personal identification number to be able to file the FAFSA electronically. Go to www.pin.ed.gov to apply. It may take a few days to receive your pin, experts said.

Even parents and students who don't expect to qualify for need-based programs should file a FAFSA, because it also determines eligibility for federal Stafford loans, said Beth Ziehmer, senior associate for operations at the financial-aid division of the Missouri Department of Higher Education.

Andrea
Coombes

Andrea Coombes is a personal-finance writer and editor in San Francisco. She's on Twitter @andreacoombes.

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